Chapter 5. A New Era


Over the years, investors have lost trillions of dollars because they made assumptions about the economy or, even worse, had personal opinions that were driven more by optimism than fact. The largest, most common mistake is believing that the market will return to a previous state. This flawed approach to investing is the genesis of the word “correction.”

Most investors make money during a rally. When the market falls they consider the decline to be a correction, and they begin looking for signs that the correction is ending. Some are more cautious than others. They wait for, what appears to be, a significant reversal of the correction before getting back in. However, the market will only regain its upward ...

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